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US major indexes closed down fractionally (SPY -0.2%) after rising from session lows. Apple dragged down U.S. stocks, but a gain in financial stocks limited the impact. Crude prices fell a full point while the US dollar continued to show strength and households are more upbeat about the labor market, a sign that the economy was regaining steam.

Todays S&P 500 Chart

The first column is what was reported this morning. The second column is what analysts had forecast and the third column is the previous report. Full calendar HERE.

The Market in Perspective

NEW YORK (Reuters) - Apple Inc was the largest weight on U.S. stock indexes on Tuesday after antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government, but gains in bank shares partly offset the decline.

WASHINGTON (Reuters) - A European Commission order requiring Apple Inc to pay $13 billion euros ($14.5 billion) in taxes on Tuesday drew swift and angry rebukes from the Obama administration and lawmakers in Congress, while re-igniting calls for international tax reform.

(Reuters) - A former Monsanto Co executive who tipped the U.S. Securities and Exchange Commission to accounting improprieties involving the company's top-selling Roundup product has been awarded more than $22 million from the agency's whistleblower program, the executive's lawyer said on Tuesday.

NEW YORK (Reuters) - U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labor market, in a further sign that the economy was regaining steam after faltering in the first half of the year.

CHICAGO (Reuters) - A federal judge on Tuesday gave Caesars Entertainment Corp a five-week shield from $13 billion in lawsuits, capping a week of frantic court hearings as the casino group struggles to salvage a high-stakes debt-cutting plan for its bankrupt subsidiary.

NEW YORK(Reuters) - Some U.S. private equity firms are courting their biggest and savviest investors with privileged access to special fee-saving deals without telling other investors, according to people involved in buyout firms' fundraising.

PARIS (Reuters) - Airbus delivered more aircraft in August than for the same period in any previous year, its top planemaking executive said on Tuesday, in a breakthrough that improves its chances of meeting 2016 targets after earlier delays in receiving parts.

PARIS/BRUSSELS (Reuters) - France cast serious doubt on Tuesday on the prospects of an EU free trade deal with the United States, adding to opposition within Germany and growing scepticism among Americans.

WINNIPEG, Manitoba/WASHINGTON (Reuters) - Canada's Agrium Inc and Potash Corp of Saskatchewan Inc said on Tuesday they are in talks to merge, a deal that would create a fertilizer and farm retailing giant worth more than $25 billion but also trigger U.S. regulatory scrutiny.

It is no secret that earnings have gone nowhere over the past two years (and are set to decline for 6 consecutive quarters), while on a GAAP basis earnings as of 2015 were the lowest since 2010...

... which means that earnings growth has not been a factor behind the stock market's recent ascent to all time highs. As a result, the conventional explanation to justify the S&P trading just shy of 2,200 is that the market has been the beneficiary of unprecedented multiple expansion. To be sure, as Goldman recently opined, the median stock multiple has never been more overvalue.

Indeed, if one left it at that, the answer would not be exactly wrong, however there is one more factor which is rarely discussed, and which - according to Deutsche Bank - explains virtually the entire equity rally of the past four years: the collapse of the equity risk premium as a result of plunging bond yields, which as a reminder, is the direct pathway by which central banks operate, by monetizing government, and now corporate, debt.

As Deutsche Bank's Dominic Konstam writes over the weekend, "various Fed officials have raised the issue of financial stability in the context of the reach for yield and riskier products to make up for low rates. This is part of financial repression. The logic might be that once the Fed has normalized, elements of that reach for yield and ri ...

Yesterday, the White House announced that the US had met President Obama's goal of admitting 10,000 Syrian refugees into the country; it did so ahead of schedule.

One year ago Obama had sought a sixfold increase in the number of Syrian refugees provided safe haven in the United States. After a slow start, the administration was able to hit the goal about a month early and just a few weeks before Obama convenes a summit on refugees during the 71st session of the United Nations General Assembly. He would have been hard-pressed to make the case for other countries to do more with the U.S. failing to reach a goal that amounts to about 2% of the 480,000 Syrian refugees in need of resettlement. Millions more Syrians have fled to neighboring states such as Jordan, Turkey and Lebanon and to countries in Europe since the civil war broke out in 2011.

Over 1 million Syrian refugees made their way to Germany, where the resultant social shock, and surge in violent terrorist attacks, have led to a plunge in Angela Merkel's approval rating. That, however, has not deterred the US from seeking to admit thousands of refugees.

"On behalf of the president and his administration, I extend the warmest of welcomes to each and every one of our Syrian arrivals, as well as the many other refugees resettled this year from all over the world," National Security Adviser Susan Rice said in a statement. More from the statement:

Less than a year ago, in response to an historic global refugee crisis, involving millions of Syrians in flight from violence and conflict, President Obama directed his Administration to increase the number of Syrian refugees provided safe haven in the United States. While refugee admissions are only a ...

In the latest note from ICI's Glenn Schorr, the analyst points out something that so many others have previously noted: namely, that the market is "weird." And it's not just one way. According to Schorr there are at least three different reasons why "it's still a little weird to us to see equity markets near all-time highs":

Eequity Capital Markets volume is down ~50%, we're in our 10th straight month of down y/y volume and volumes are below average as a percentage of GDP. Reasons for the disconnect include a combination of macro fears spurred by oil's nosedive, Brexit (EMEA is the slowest region), terrorism and investors being wary about a market propped up by QE and insanely low interest rates.
Additionally, PE funds are doing more selling vs IPO'ing lately (500bps above average) and block trades are 3x their normal percentage of secondary volume as sellers look to take the money and run instead of taking the next 2 years to work their way out of a position.
Finally, several industries (like energy, biotech/health care and parts of technology) have been lesser participants given their own fundamental and/or regulatory challenges lately.

Here are the details:

Given where equity markets are, you'd think there'd be more ECM activity - instead we've seen 10 months in a row of down y/y results: Over the past 15 years, there's been a nearly 50% correlation between global ECM deal volume and the S&P 500, reflecting mgmt teams rationally wanting to issue stock at higher prices & their hesitance to do so when markets are tanking. Currently, we're in a period which seems to have started in the middle of last year where that relationship has disconnected (Figure 1). In a way it makes some sense. During the last 14 months, CEOs have seen a ton of volatility-inducing, hold-onto-your-seats global item ...

Oil futures settled at a two-week low on Tuesday, as strong consumer confidence data helping to lift the dollar and traders awaited reports that are expected to show a weekly increase in U.S. crude inventories.

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